Why we closed down a million-dollar business.

We started our last company, SliceBread, in December 2015. Within three months we were able to bootstrap the company into profitability. We raked in half a million in revenues in the first year and grew consistently over the next eighteen months. And yet, in June 2018, we ceased operations.

TLDR;

Because we were running an innovation consulting business – without really understanding the needs of the customers we were serving.

See the irony?

Here’s the full story:

#1 We stumbled upon the opportunity by accident

Summer 2015, Kshitiz and I had come to terms with the failure of our first startups. We were broke, we were bruised, and we didn’t know what our next step would be. And one day, out of the blue, a friend of mine came to me with an opportunity – “To build a PoC for an innovation lab for one largest bank in the world”. It sounded incredible, and I’m glad we jumped on it.

The project began, and we got to work with some super-smart people out of a marvelous colonial villa. We’d been given a crazy challenge – “build a chatbot for client advisors in eight weeks”. The tech was new, the timeline was tight and we were determined to deliver. It was exhilarating, and we were very hungry.

Four weeks in we were having so much fun, we decided to find out if anyone else needed PoCs built. I wrote out some emails – and voila, an innovation team at one of the largest insurance companies in the world responded. They were looking for help with a PoC, we pitched for it, and we got it. We knew there must be something here. We decided to start a new company – SliceBread, to build cool new things.

#2 We couldn’t define a clear vision for the company.

During the following year we worked hard, and by doing good work – we were able to build relationships and work with several leading financial institutions on a multitude of exciting projects. We built a team, learned new technologies, learned how to manage clients, how to sell to the enterprise, and everything else you learn as a founder as your business starts growing.

I’m extremely thankful for this part of our journey, it helped us mature professionally. More importantly, it helped restore our self-confidence after the failure of our first startups. But, by the end of the first year, we started feeling like there was something missing. We didn’t know what it was.

In 2017 – the second year of our business, Design Thinking and Lean Startup had gained a lot of traction around the world. The Sprint book had popularized how those practices could be adopted in a simple manner. And there was an increasing awareness that innovation is not a magical thing that just happens – there exists a set of practices that can bring method to the madness.

All the consulting firms had caught on to this trend and started bringing these ideas to the mainstream, and every company was starting to re-organize their teams, building up new capabilities and setting up new processes geared toward becoming more customer-centered.

We had also evolved with the market, our service offerings were in line with these trends and business was good. Our focus on execution had helped us lay the foundations of sustainable business. We were getting bigger, longer-term contracts.

However, by the end of the year, we were faced with an unexpected problem. We didn’t have a clear vision of where to take the company. I was at a conference where I struck up a conversation with an influential innovation leader. When I told her what our company did, her candid response was, “Isn’t every man and his dog doing that?”

We realized that our lack of vision was slowly leading us towards undifferentiated offerings that couldn’t capture the imagination of our customers. If this continued, we’d find it very difficult to build a meaningful company.

#3 We started thinking about what our customers really needed

We took a step back to think about what was common across all the clients we had worked with, what had changed since we had started, and what remained the same? And uncovered that there is only one key driver behind all the trends we had observed, and that is – “the reducing cost of building new products”.

The internet, open-source, and cloud computing, have made it cheaper and faster than ever to build something new. This has led to more competition than ever before – both from incumbents and startups all over the world. As a result, customers have more choices than ever before. Therefore, if they don’t get what they want from one product, they can easily switch to an alternative solution.

We realized that it is the threat from competitors that is driving companies the adoption of design thinking, lean startup, and everything innovation. It is a response to fundamental shifts happening in the market driven by the reducing cost of building products.

Therefore, to survive, every company will have to figure out how to build products that better serve customers’ needs. And the speed at which they can do this will become their competitive advantage.

Our accidental start had put us right in the center of how companies are responding to the changes that technology is enabling. All the services we were providing to our clients were driven by a need to transform how they operate, and the hiring of our services was their way of running experiments on how to get ready for the change.

We knew this because in the time we ran SliceBread we saw the innovation labs grow in size and mandate; and in several cases, transition into strategic consultants providing advice to product managers in the company.

#4 We decided to serve our customers’ needs.

The problem was that our existing business was designed to deliver services. The fact that it was a profitably running business meant it required significant investment in terms of time and money to keep it that way.

To be able to act on our insights and solve the real problem our customers were facing we’d have to spend a lot of time and resources figuring out the nitty-gritty of their problems and testing out several solutions before we found something that would work.

It was going to be a huge risk on our part, and the only way to pursue it would be to give up on our million-dollar ‘accidental business’. But, we had finally understood what our customers needed. So, in June 2018, we started working full-time on our new company, Epiphany, with one purpose – “To make it faster for innovators to build things people want”.

After a year of several rounds of interviews, prototypes, and experiments, I’m happy to say that we’ve found a solution that works. It solves the most fundamental problems you’d face while working on any product – it helps make sense of what people are saying to figure out what you should build next.

If you, like us, are working on building products people want – let us know by requesting access to our beta.

Epiphany is a product discovery software that helps your team make sense of qualitative feedback & user research data – to identify underserved needs, and set roadmap priorities.